"I am always fascinated by the question of whether the most talented people end up in critical positions -- in politics, business, academia, or the military. It's amazing the way some people develop during their lives."
- Bill Gates

Economist David Tufte describes grading
GDP growth as though it were an academic grade in a college course. This idea is useful in that it helps to put these esoteric numbers into tangible perspective.

The growth rate illustrated here is the annualized rate of change from the previous quarter; that is, if the GDP had grown by 1% from the previous quarter, then its annualized rate (the measurement shown here) would be 4%. This scorecard uses chained dollars from the year 2000. This is an attempt to remove the effects of inflation, which would have distorted the performance listings in periods of high inflation like the late 1970s.

Shown in this way, one can easily pick up on some of the major events of the last 55 years. The impact of the September 11th attacks in 2001 is clear, as are the long periods of prosperity during President Bill Clinton's second term and most of President Ronald Reagan's two terms in office. One can especially see the "Morning in America" period that led to Reagan's landslide victory in 1984. The malaise of President Jimmy Carter's administration is obvious, too. What's somewhat more difficult to illustrate is how the 1950s were characterized many incredible periods of very high growth, punctuated by a handful of very painful quarters.

What's also impressive is that the economy has only shrunk during three quarters since 1991 -- once directly attributable to 9/11, and the other two certainly related to the bursting of the stock market bubble of the late 1990s.

Growth is, in fact, just about the only thing that matters. For a variety of reasons, it is imperative that the economic environment be tuned to growth.

It's also worth noting that the mean quarterly growth rate has declined each decade, except during the 1990s:

1950s

4.4%

1960s

4.4%

1970s

3.4%

1980s

3.1%

1990s

3.3%

2000s

2.1%

While there are some who would argue that a growing economy inevitably will grow more slowly as it gets larger, there is reason as well to believe that some of the decline may be related to the increase in tax rates and regulations that have inevitably accumulated over time. A worthwhile analysis might test the significance of total taxation and regulation as a causal variable against GDP growth.